NiSource (NYSE: NI) enters $2.2 billion battery storage tolling deal

What happened

NiSource Inc. (NYSE: NI) said GenCo entered a Battery Storage System Tolling Agreement for a 600 MWAC / 2,400 MWh project. Atlas Storage 1 LLC, an indirect subsidiary of AGP Capital Holdings Pte. Ltd., will develop, construct, own and operate the stand-alone battery energy storage system. The project will connect to the transmission system operated by the Midcontinent Independent System Operator, Inc. (MISO).

GenCo will supply the electricity used to power the project. It can also direct dispatch and receive the project's available capacity, discharged energy, energy storage services, ancillary services and environmental attributes. The delivery term is expected to last about twenty and a half years, starting with the first phase's commercial operation date, expected by December 1, 2027. GenCo also gets an exclusive and irrevocable option to buy the project at specified intervals during the term and at the end.

Key numbers

Metric	Latest	Change	Source
Project capacity	600 MWAC / 2,400 MWh		SEC 8-K
Expected aggregate storage payments	$2.2 billion		SEC 8-K
Delivery term	approximately twenty and a half years		SEC 8-K
First phase expected commercial operation	December 1, 2027		SEC 8-K
Condition deadline	January 31, 2027		SEC 8-K

Read more: NiSource (NI) stock analysis and investment case

Why it matters

GenCo's aggregate storage payments over the delivery term are expected to be approximately $2.2 billion. The Tolling Agreement is expected to be accounted for as a finance lease obligation under FASB ASC Topic 842. That makes the commitment long dated, since the payment stream runs over about twenty and a half years.

OptimistFi's case is that NiSource can compound earnings through regulated investment if rate recovery and financing stay friendly enough to support heavy capital needs. This filing is mixed because it adds a long-dated obligation, but it also gives GenCo dispatch rights and a later purchase option on the project. The main caveat is that the agreement is not effective until AGP Group signs an engineering, procurement and construction contract and an interconnection agreement by January 31, 2027.

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What's next

The agreement becomes effective only if AGP Group meets those conditions by January 31, 2027. The first phase is expected to reach commercial operation by December 1, 2027, and that date starts the delivery term. If the conditions close on time, the setup gets clearer. If they do not, the obligation and schedule remain unsettled.

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